The pound to a 7-week high this morning as for the Bank of England meeting at which the central bank is expected to talk up a rate rise in May.

The pound, helped by a dollar that weakened overnight following the U.S. Federal Reserve meeting, has rallied this week after the European Union and Britain agreed on a Brexit transition deal and wage growth hit its fastest pace in almost 2-1/2 years.

With more clarity about Brexit talks and wages growing almost as much as inflation, the BoE looks to have its path cleared for a rate hike in May.

The dollar dropped to a one-month low against a basket of currencies after the Federal Reserve issued a forecast for future policy that was less hawkish than expected.

The Fed raised U.S. interest rates by 25 basis points to 1.75 percent on Wednesday and signalled two more hikes for 2018, but markets were expecting a total of four rate hikes in 2018.